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Tuesday, July 7, 2009 | Looking for office space? Check The San Diego Union-Tribune.
Not in the newspaper. In its headquarters.
Three floors in the company’s five-story Mission Valley offices were posted for rent Monday. The newspaper’s staff is expected to consolidate into the remaining two floors.
The possible lease is the latest cost-saving move to come from the newspaper’s new owners, Beverly Hills-based Platinum Equity, which bought the Union-Tribune in March. Platinum Equity has also posted for sale two office buildings that belonged to Copley Press, the newspaper’s former owner. And it laid off 192 employees in early May.
Thomas Olson, senior vice president of Coldwell Banker Commercial, the listing agent, said the newspaper planned to lease the first, fourth and fifth floors of its five-story headquarters. He cautioned that the exact plan could change. A Union-Tribune spokesman didn’t return a call.
The building, which opened in 1974, has extra space: The paper’s staff has shrunk 40 percent in the last three years, dropping from 1,422 employees in 2006 to 850 this year. That reduction is evident from its newsroom to its parking lot.
In the newsroom, employees who sit desks away from each other can have conversations in normal tones, a newsroom employee said. Entire clusters of desks are empty.
“It’s just kind of still,” said another newsroom staffer. “There aren’t enough people to create the hubbub of a newsroom.”
Five years ago, an employee arriving late to work would have a hard time finding a space in the company’s parking lot. Now its plethora of parking is a selling point to lure potential tenants to the property.
If the newspaper rents out the building’s fourth and fifth floors, it will give up some of its most precious space. The spacious suite once used by David Copley, the paper’s former publisher, is on the fifth floor, along with the company lunchroom and a large patio.
The paper’s editorial boardroom, which has welcomed newsmakers for 35 years, sits on the fourth floor. Dozens of pictures of past presidents, secretaries of state and other notables adorn the walls of the room.
The company’s newsroom sits on the third floor, which wouldn’t be leased out. And the Union-Tribune’s presses, which are housed in a separate building on the site, will not be moved.
The building’s three-page commercial listing boasts “highly upgraded executive offices,” “large work areas” and a “spacious exterior terrace.”
And a large tenant could put its name on the building’s exterior or on a ground-level monument in front of the building, Olson said.
The building has 166,000 square feet of rentable space, Olson said, and 95,500 square feet of that will be available to a potential tenant at $2.10-$2.25 per square foot. (A tenant taking all of it would pay between $200,000 and $214,000 monthly — including utilities and janitors.) The newspaper would stay in the remaining 70,500 square feet — and in the process would become the minority tenant of its own building.
Olson said he hadn’t toured any prospective tenants around the building since the listing was posted Monday, and said he is hopeful that the economic downturn won’t keep them away. Tours are available as early as tomorrow, he said.
“The market is slow, but this is an iconic building,” he said. “Everybody knows it. So we’re hoping we have good interest.”
But commercial real estate brokers and analysts said finding a single tenant for the space would be difficult.
Gary London, a local real estate analyst, said the site wouldn’t be ideal for a company looking for high visibility but might suit the back offices of a large, high-profile law or accounting firm.
London said the economic downturn would make it harder to find a tenant. “There’s a lot of space out there,” he said. But the company’s decision to consolidate and lease out the extra space is “exactly the right strategic move — regardless of timing or the quality of the real estate,” London said. “They’re doing exactly the right thing.”
Jason Hughes, principal of Irving Hughes Inc., a firm that represents commercial tenants looking for space, said San Diego has many more vacant, large offices than tenants. That means that landlords must make extensive improvements to attract those few tenants, he said.
“Vacancy is climbing by the day and this market is getting bad,” Hughes said. “It’s just got nowhere but worse to go. You don’t want to be a landlord in this environment.”
And landing a single big tenant for the space — which would be the Union-Tribune’s best-case scenario — is likely wishful thinking, said Sean McNulty, senior vice president of Commercial Realty Advisers, a local brokerage. It’s more likely that the available space would be chopped up to make room for multiple tenants.
“One-hundred thousand square feet is enormous,” McNulty said. “If you’re going to sit and wait for the next 100,000 (square foot) tenant, you’re going to be waiting a long time.”